Prokaryotes contain at least five distinct families of protein O-phosphatases, including AceK, the chimeric isocitrate dehydrogenase kinase/phosphatase, and four protein phosphatase families first identified and characterized in Eukaryotes. The latter consist of the PPP and PPM families of protein-serine/threonine phosphatases, and the low molecular weight and conventional families of protein-tyrosine phosphatases. Prokaryotic protein O-phosphatases participate in the regulation of metabolic processes and the transduction of environmental signals. Certain pathogenic bacteria employ protein-tyrosine phosphatases as virulence factors, injecting them into host cells where they enzymatically perturb the phosphorylation state of proteins therein. While our understanding of protein O-phosphorylation events in Prokaryotes only now is emerging from its infancy, their phylogenetic diversity and malleability to genetic manipulation render these "simple'" organisms powerful vehicles for answering fundamental questions concerning the origins and evolution of this key biological regulatory mechanism.